Your auto insurance policy should change along with your needs

Friday

Mar 18, 2011 at 12:01 AMMar 18, 2011 at 6:16 PM

Life has many stages, and your car insurance needs could change as much as you do during the years. Car insurance companies market all kinds of products to enhance a basic policy for varying needs, but what do you really need? Here are guidelines from the National Association of Insurance Commissioners.

Karen Caffarini

Life has many stages, and your car insurance needs could change as much as you do during the years. Car insurance companies market all kinds of products to enhance a basic policy for varying needs, but what do you really need? Here are guidelines from the National Association of Insurance Commissioners.

Young and single
Young people can remain on their parents’ auto policy as long as they live with them and don’t own their own vehicle, saving money because parents are considered lower-risk drivers. If a student bought his or her own car and needs an individual policy, determine liability coverage by considering how much in assets the student may accumulate in the next two years. Younger drivers usually have few assets, so less liability coverage is needed. Ask for an accident forgiveness clause that promises not to raise premiums if a student gets into one minor accident. If a student is at college in another state, check that state’s rates. Ask for price breaks for good grades and for taking a defensive driver course.

Young parents
At this time of your life, you may begin to interact with other parents, perhaps carpooling kids to day care or taking preschoolers and elementary-age kids on school trips. You may want to increase your liability insurance in case of an accident, according to the NAIC. You also may be accumulating more assets and, therefore, might want to consider purchasing an umbrella policy to raise your liability coverage. This would better protect your financial resources in the event of a lawsuit stemming from a car accident.

Established families
Your preschooler is now a teen behind the wheel of your car. Brace yourself for higher rates. Industry figures show a female teen causes rates to increase up to 50 percent; a young male driver can boost them by 100 percent. If you’re chauffeuring kids on the soccer team to practices, you might want to increase your liability insurance. If your net worth has grown, you might want to purchase an umbrella policy.

55 and older
There are benefits to growing older. Car insurance tends to go down — at least until you reach age 70, according to the NAIC. Discounts may be available for seniors who drive fewer than 7,500 miles a year or only during daylight hours. If your children left home and are not regularly driving your vehicle, your auto premiums may drop. Companies will try to market all kinds of products to drivers at this age, including IRA rollovers. Talk to your broker about what you really need, which may include an umbrella policy.